Pleasanton Weekly

Opinion - February 4, 2011

Contract should be renegotiated

by Bart Hughes

The current Pleasanton PCEA employee contract should be renegotiated for several reasons. First, the contract would mean that Pleasanton retirement costs continue to rise faster than the overall budget thereby crowding out other line items. Inevitably this means a reduction in services for residents. Staff acknowledged this cost point during the public workshop on Tuesday evening.

Second, the contract would ensure that Pleasanton's retirement unfunded liability, already an unsustainable $185 million (market value adjustment), will continue to grow. Simply put, it is irresponsible to continue to let this happen. Once again, staff acknowledged this liability growth point Tuesday evening.

Third, the city did not put forward a credible plan to address our unfunded liability. The suggestion to use current city reserves to pay off the debt is not feasible and would put the city in a precarious financial position. It is an unsustainable approach to approve employee contracts without a concrete framework to address the liability. Essentially, this contract would be "kicking the can down the road."

Fourth, it is the fiduciary responsibility of our elected officials to consider new material information. Since the Nov. 6 closed-door agreement, CalPERS communicated that Pleasanton's contribution costs will grow substantially over the next few years. On top of this, CalPERS communicated further rate increases due to its planned reduction of investment returns assumption. This has not been accommodated for with the current tentative agreement.

Lastly, this contract was discussed and agreed upon behind closed doors and well before the public had the opportunity to provide input. This action is quite dissimilar to how many cities operate. Cities like Santa Cruz first gather input from citizens and then enter into labor negotiations. The mayor and several City Council members stated the need to negotiate in good faith with the union and therefore are bound by this tentative agreement. Where is the good faith with regards to citizens? How can the City Council bind the city to a decision outcome that admittedly excluded public input early in the process?

The following omission is quite telling: The current proposal does not contain a two-tier pension element that so many other cities have already implemented. A two-tier pension would not cost current employees anything but would allow Pleasanton to begin to control long-term pension costs. And yet the City Council doesn't feel it is right to send the contract back for re-negotiation. To date, absolutely no contract changes have been made due to public input.

Unfortunately, it appears that this contract will be approved as is. Pleasanton residents deserve and should have had a better outcome that balances the needs and sacrifices of both employees and citizens. Most everyone, including the mayor and City Council, acknowledge that we have a serious issue that needs to be addressed. It should start now in a meaningful way with this current contract.

Bart Hughes has been a proud resident of Pleasanton for 12 years. During his 20-plus year career, he has held senior management positions with several leading technology companies where he focused on operational improvement. He has held several board positions with local nonprofit organizations. In addition to his engineering degree, he holds a graduate degree in business.

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